DATE:
April 19, 2022
TO:
Mayor and City Council Members
FROM:
Nils Bentsen, City Manager
BY:
Rachel Molina, Assistant City Manager
Victor Knight, Economic Development Manager
SUBJECT:
Community Development Block Grant (CDBG) 2022-2023 Annual Action Plan and Substantial Amendment to the CDBG 2020-2021 Annual Action Plan
RECOMMENDED ACTION
It is recommended that the City Council conduct a public hearing and upon accepting public testimony: (1) Adopt Resolution No. 2022-026 approving the 2022-2023 Annual Action Plan (AAP) and Substantial Amendment to the 2020-2021 Annual Action Plan (Substantial Amendment); (2) Authorize staff to modify the AAP and Substantial Amendment based upon the City Council’s direction; (3) Provide City staff with a methodology to distribute funds should the City’s 2022-2023 annual allocation increase or decrease; and (4) Authorize the City Manager and/or their designee to execute and transmit all necessary documents, including the adopted Community Development Block Grant (CDBG) 2022-2023 AAP and any amendments to the U.S. Department of Housing and Urban Development (HUD), to assure the City’s timely receipt of CDBG funding.
BACKGROUND
HUD mandates that all entitlement communities receiving CDBG funds prepare and submit a Consolidated Plan every five years to establish a unified, strategic vision for economic development, housing, and community development actions. The Consolidated Plan encompasses the analysis of local community needs and coordinates appropriate responses to those needs and priorities.
Annual Action Plan (AAP)
To ensure compliance with the Consolidated Plan, the City is required to submit an AAP which outlines the planned activities and budgets for the upcoming program year. In addition, each year the City is required to evaluate progress toward meeting the goals identified in the Consolidated Plan. The AAP will appropriate CDBG funds to specific programs and projects for the 2022-2023 program year.
In preparation of the AAP, applications for Administration and Non-Administration/Non-Public Service (Capital) activities were circulated to all City Departments. Secondly, an application was sent to Inland Fair Housing and Mediation Board (IFHMB) to comply with the CDBG requirements of funding activities that address fair housing. Lastly, hardcopies of the applications were made available at City Hall and on the City’s website. Applications were due on February 14, 2022, at 5:30 p.m. and no late applications were accepted.
Substantial Amendment
A Substantial Amendment to a Con Plan and/or AAP is required when a “substantial” change is proposed to funding levels, goals, or activities. In this case, the repurposing and reprogramming of $467,000 from three (3) activities to the Peach Avenue Drainage Improvement Project during the 2022-2023 AAP, triggers a “substantial” change.
ISSUES/ANALYSIS
AAP
Based on the information received from the applications and in consideration of the City’s five-year goals, the proposed 2022-2023 AAP Administration (including Fair Housing activities) and Non-Administration/Non-Public Service funding recommendations for the City Council's consideration is attached hereto as Exhibit “A”. The recommended funding allocations address high priority activities including funding for the City’s continuing Street Improvement Project and Peach Avenue Drainage Improvement Project. In accordance with CDBG Program National Objectives, the goal of the AAP is to serve the City’s low- and moderate-income residents, eliminate slum and/or blight, and meet other urgent community needs. Furthermore, the recommendations are consistent with the City’s 2020-2024 Consolidated Plan and any amendments to the plan. Notwithstanding the foregoing, the Council retains complete discretion to modify the CDBG funding recommendations as presented and may propose alternative funding allocations.
As of the date of this notice, HUD has not yet released the City’s 2022-2023 CDBG annual allocation. For this reason, HUD has advised the City to prepare its AAP utilizing the City’s current year CDBG annual allocation of $992,601. HUD regulations allow a maximum of 20% ($198,520) of grant funds for eligible Administration/Planning activities, including fair housing initiatives. However, City staff have elected to only allocate $115,000 for Administration/Planning activities. In addition, HUD regulations allow a maximum of 15% of the annual allocation to be allocated for Public Service activities. Under City Council advisement and to reduce the administrative burden on City staff, public service agencies will continue to be funded with less restrictive City funds under its Community Assistance Program (CAP). Therefore, the remaining balance of $877,601 will be allocated pursuant to the 2022-2023 AAP.
Due to the uncertainty in the City’s 2022-2023 annual allocation, a request of the City Council is being made to provide staff and the public with a methodology for which activity budgets will be adjusted when the final allocation is released by HUD. It is recommended that City Council adopt the following language for adjusting activity budgets for the CDBG program:
Should the CDBG allocation be higher than $992,601:
Balance of additional funds will be allocated to the 2022-2023 Street Improvement Project.
Funding levels for all outstanding activities will remain the same as proposed in the 2022-2023 AAP.
Should the CDBG allocation be lower than $992,601:
Balance of reduced funds will be deducted from the 2022-2023 Street Improvement Project.
Funding levels for all outstanding activities will remain the same as proposed in the 2022-2023 Action Plan.
Department Recommendations
Exhibit A contains Recommendations for 2022-2023 funded Administration and Non-Administration/Non-Public Service (Capital) activities. To ensure compliance with meeting the City’s five-year goals, recommendations for funding of all applications are being proposed at varying funding levels to stay within the budget set aside for Non-Administration/Non-Public Service activities. Each activity that is recommended for funding has received CDBG funds in prior program years and is monitored by the City’s Economic Development Department to ensure overall compliance with the CDBG program. Again, the City Council retains complete discretion to modify the CDBG funding recommendations as presented by staff and may propose alternative allocations.
Due to certain public noticing and 30-day review period requirements, the City Council is encouraged to adopt funding allocations, whether they be as recommended by staff or as preferred alternatives from City Council, for the 2022-2023 AAP at its April 19, 2022, City Council meeting. The 30-day public review period commenced on Friday, March 18, 2022, and concluded thereafter on Tuesday, April 19, 2022. Upon conclusion of the public comment period, all written documents received will be incorporated into the final document submitted to HUD. In addition, staff will adjust activity budgets in accordance with City Council’s direction prior to submittal to HUD.
Substantial Amendment
The City has elected to repurpose a combined amount of $467,000 from the 2020-2021 Microenterprise Assitance Program (MAP), 2020-2021 Street Improvement Project and 2020-2021 Emerency Housing and Utility Asistance Program (EHUAP) to the Peach Avenue Drainage Improvement Project. All proposed reprogramming of funds will be incorporated into the City’s 2022-2023 AAP as unprogrammed prior year resources. The proposed project includes the construction of pedestrian/drainage structures(s) consisting of Reinforced Concrete Boxes (RCBs), an earthen embankment to raise the profile of the existing roadway and new asphalt roadway over the pedestrian/drainage structure(s). As of the date of this public hearing, the City has already awarded the construction contract for the project. The proposed repurposing of funds will allow the City to fully fund the project with CDBG funds, thus increasing the City’s ability of meeting its timeliness test that will be ran by HUD in May 2022.
FISCAL IMPACT
The City’s 2022-2023 CDBG entitlement has not yet been released by HUD; however, it is anticipated that it will be approximately $992,601. City Council’s approval of the recommended action adopts the 2022-2023 Action Plan allocating those resources to the programs and activities outlined therein which will be incorporated into the Economic Development Department’s 2022-2023 CDBG budget as required to meet the mandates of the plan. CDBG funds may only be utilized for certain eligible expenses and the 2022-2023 Action Plan satisfies this requirement.
The $477,000 impacted by the Substantial Amendment has previously been awarded to and received by the City. The Substantial Amendment will require a City budget amendment to reallocate a) $147,000 from the 251-25-270-6011-7500/251-25-270-6011-8000 (MAP) account codes; b) $100,000 from the 251-29-700-7162-8000 (2020-2021 Street Improvement Project) account code; and c) $220,000 from the 251-25-270-2646-7500/251-25-270-2646-8000 (EHUAP) account codes; to the 251-29-700-7158-8000 (Peach Avenue Drainage Improvement Project) account codes. The approval of this Substantial Amendment will ensure that the City’s CDBG funds are utilized in a timely manner.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
Resolution No. 2022-026
Application Notebooks (Binders provided under separate cover) Exhibit A: Department Action Plan Budget Recommendation Exhibit B: Application Summary Matrix
A copy of the 2022-2023 Action Plan is on file with the City Clerk and is available on the City’s website Substantial Amendment to the 2020-2021 Action Plan
Page PAGE 4 of NUMPAGES 4
Staff Report to the Mayor and Council Members
CDBG 2022-2023 AAP &CDBG 2020-2021 Substantial Amendment April 19, 2022
City of Hesperia
STAFF REPORT